>> Announcer: From the Cube's studios in Palo Alto in Boston, bringing you data-driven insights from The Cube and ETR. This is "Breaking Analysis" with Dave Vellante. >> Exactly one week after Pat Gelsinger's announcement of his plans to reinvent Intel. Arm announced version nine of its architecture and laid out its vision for the next decade. We believe this vision is extremely strong as it combines an end-to-end capability from Edge to Cloud, to the data center, to the home and everything in between. Arms aspirations are ambitious and powerful. Leveraging its business model, ecosystem and software compatibility with previous generations. Hello every one and welcome to this week's Wikibon Cube Insights powered by ETR. And this breaking analysis will explain why we think this announcement is so important and what it means for Intel and the broader technology landscape. We'll also share with you some feedback that we received from the Cube Community on last week's episode and a little inside baseball on how Intel, IBM, Samsung, TSMC and the U.S. government might be thinking about the shifting landscape of semiconductor technology. Now, there were two notable announcements this week that were directly related to Intel's announcement of March 23rd. The Armv9 news and TSMC's plans to invest a $100 billion in chip manufacturing and development over the next three years. That is a big number. It appears to tramp Intel's plan $20 billion investment to launch two new fabs in the U.S. starting in 2024. You may remember back in 2019, Samsung pledged to invest a $116 billion to diversify its production beyond memory trip, memory chips. Why are all these companies getting so aggressive? And won't this cause a glut in chips? Well, first, China looms large and aims to dominate its local markets, which in turn is going to confer advantages globally. The second, there's a huge chip shortage right now. And the belief is that it's going to continue through the decade and possibly beyond. We are seeing a new inflection point in the demand as we discussed last week. Stemming from digital, IOT, cloud, autos in new use cases in the home as so well presented by Sarjeet Johal in our community. As to the glut, these manufacturers believe that demand will outstrip supply indefinitely. And I understand that a lack of manufacturing capacity is actually more deadly than an oversupply. Look, if there's a glut, manufacturers can cut production and take the financial hit. Whereas capacity constraints mean you can miss entire cycles of growth and really miss out on the demand and the cost reductions. So, all these manufacturers are going for it. Now let's talk about Arm, its approach and the announcements that it made this week. Now last week, we talked about how Pat Gelsinger his vision of a system on package was an attempt to leapfrog system on chip SOC, while Arm is taking a similar system approach. But in our view, it's even broader than the vision laid out by Pat at Intel. Arm is targeting a wide variety of use cases that are shown here. Arm's fundamental philosophy is that the future will require highly specialized chips and Intel as you recall from Pat's announcement, would agree. But Arm historically takes an ecosystem approach that is different from Intel's model. Arm is all about enabling the production of specialized chips to really fit a specific application. For example, think about the amount of AI going on iPhones. They move if I remember from fingerprint to face recognition. This requires specialized neural processing units, NPUs that are designed by Apple for that particular use case. Arm is facilitating the creation of these specialized chips to be designed and produced by the ecosystem. Intel on the other hand has historically taken a one size fits all approach. Built around the x86. The Intel's design has always been about improving the processor. For example, in terms of speed, density, adding vector processing to accommodate AI, et cetera. And Intel does all the design and the manufacturing in any specialization for the ecosystem is done by Intel. Much of the value, that's added from the ecosystem is frankly been bending metal or adding displays or other features at the margin. But, the advantage is that the x86 architecture is well understood. It's consistent, reliable, and let's face it. Most enterprise software runs on x86. So, but very, very different models historically, which we heard from Gelsinger last week they're going to change with a new trusted foundry strategy. Now let's go through an example that might help explain the power of Arm's model. Let's say, your AWS and you're doing graviton. Designing graviton and graviton2. Or Apple, designing the M1 chip, or Tesla designing its own chip, or any other company in in any one of these use cases that are shown here. Tesla is a really good example. In order to optimize for video processing, Tesla needed to add specialized code firmware in the NPU for it's specific use case within autos. It was happy to take off the shelf CPU or GPU or whatever, and leverage Arm's standards there. And then it added its own value in the NPU. So the advantage of this model is Tesla could go from tape out in less or, or, or or in less than a year versus get the tape out in less than a year versus what would normally take many years. Arm is, think of Arm is like customize a Lego blocks that enable unique value add by the ecosystem with a much faster time to market. So like I say, the Tesla goes from logical tape out if you will, to Samsung and then says, okay run this against your manufacturing process. And it should all work as advertised by Arm. Tesla, interestingly, just as an aside chose the 14 nanometer process to keep its costs down. It didn't need the latest and greatest density. Okay, so you can see big difference in philosophies historically between Arm and Intel. And you can see Intel vectoring toward the Arm model based on what Gelsinger said last week for its foundry business. Essentially it has to. Now, Arm announced a new Arm architecture, Armv9. v9 is backwards compatible with previous generations. Perhaps Arm learned from Intel's failed, Itanium effort for those remember that word. Had no backward compatibility and it really floundered. As well, Arm adds some additional capabilities. And today we're going to focus on the two areas that have highlighted, machine learning piece and security. I'll take note of the call out, 300 billion chips. That's Arm's vision. That's a lot. And we've said, before, Arm's way for volumes are 10X those of x86. Volume, we sound like a broken record. Volume equals cost reduction. We'll come back to that a little bit later. Now let's have a word on AI and machine learning. Arm is betting on AI and ML. Big as are many others. And this chart really shows why, it's a graphic that shows ETR data and spending momentum and pervasiveness in the dataset across all the different sectors that ETR tracks within its taxonomy. Note that ML/AI gets the top spot on the vertical axis, which represents net score. That's a measure of spending momentum or spending velocity. The horizontal axis is market share presence in the dataset. And we give this sector four stars to signify it's consistent lead in the data. So pretty reasonable bet by Arm. But the other area that we're going to talk about is security. And its vision day, Arm talked about confidential compute architecture and these things called realms. Note in the left-hand side, showing data traveling all over the different use cases and around the world and the call-out from the CISO below, it's a large public airline CISO that spoke at an ETR Venn round table. And this individual noted that the shifting end points increase the threat vectors. We all know that. Arm said something that really resonated. Specifically, they said today, there's far too much trust on the OS and the hypervisor that are running these applications. And their broad access to data is a weakness. Arm's concept of realms as shown in the right-hand side, underscores the company strategy to remove the assumption that privileged software. Like the hypervisor needs to be able to see the data. So by creating realms, in a virtualized multi-tenant environment, data can be more protected from memory leaks which of course is a major opportunity for hackers that they exploit. So it's a nice concept in a way for the system to isolate attendance data from other users. Okay, we want, we want to share some feedback that we got last week from the community on our analysis of Intel. A tech exec from city pointed out that, Intel really didn't miss a mobile, as we said, it really missed smartphones. In fact, whell, this is a kind of a minor distinction, it's important to recognize we think. Because Intel facilitated WIFI with Centrino, under the direction of Paul Alini. Who by the way, was not an engineer. I think he was the first non-engineer to be the CEO of Intel. He was a marketing person by background. Ironically, Intel's work in wifi connectivity enabled, actually enabled the smartphone revolution. And maybe that makes the smartphone missed by Intel all that more egregious, I don't know. Now the other piece of feedback we received related to our IBM scenario and our three-way joint venture prediction bringing together Intel, IBM, and Samsung in a triumvirate where Intel brings the foundry and it's process manufacturing. IBM brings its dis-aggregated memory technology and Samsung brings its its volume and its knowledge of of volume down the learning curve. Let's start with IBM. Remember we said that IBM with power 10 has the best technology in terms of this notion of dis-aggregating compute from memory and sharing memory in a pool across different processor types. So a few things in this regard, IBM when it restructured its micro electronics business under Ginni Rometty, catalyzed the partnership with global foundries and you know, this picture in the upper right it shows the global foundries facility outside of Albany, New York in Malta. And the partnership included AMD and Samsung. But we believe that global foundries is backed away from some of its contractual commitments with IBM causing a bit of a rift between the companies and leaving a hole in your original strategy. And evidently AMD hasn't really leaned in to move the needle in any way and so the New York foundry, is it a bit of a state of limbo with respect to its original vision. Now, well, Arvind Krishna was the face of the Intel announcement. It clearly has deep knowledge of IBM semiconductor strategy. Dario Gill, we think is a key player in the mix. He's the senior vice president director of IBM research. And it is in a position to affect some knowledge sharing and maybe even knowledge transfer with Intel possibly as it relates to disaggregated architecture. His questions remain as to how open IBM will be. And how protected it will be with its IP. It's got, as we said, last week, it's got to have an incentive to do so. Now why would IBM do that? Well, it wants to compete more effectively with VMware who has done a great job leveraging x86 and that's the biggest competitor in threat to open shift. So Arvind needs Intel chips to really execute on IBM's cloud strategy. Because almost all of IBM's customers are running apps on x86. So IBM's cloud and hybrid cloud. Strategy really need to leverage that Intel partnership. Now Intel for its part has great FinFET technology. FinFET is a tactic goes beyond CMOs. You all mainframes might remember when IBM burned the boat on ECL, Emitter-coupled Logic. And then moved to CMOs for its mainframes. Well, this is the next gen beyond, and it could give Intel a leg up on AMD's chiplet intellectual properties. Especially as it relates to latency. And there could be some benefits there for IBM. So maybe there's a quid pro quo going on. Now, where it really gets interesting is New York Senator, Chuck Schumer, is keen on building up an alternative to Silicon Valley in New York now it is Silicon Alley. So it's possible that Intel, who by the way has really good process technology. This is an aside, it really allowed TSMC to run the table with the whole seven nanometers versus 10 minute nanometer narrative. TSMC was at seven nanometer. Intel was at 10 nanometer. And really, we've said in the past that Intel's 10 nanometer tech is pretty close to TSMC seven. So Intel's ahead in that regard, even though in terms of, you know, the intervener thickness density, it's it's not, you know. These are sort of games that the semiconductor companies play, but you know it's possible that Intel with the U.S. government and IBM and Samsung could make a play for that New York foundry as part of Intel's trusted foundry strategy and kind of reshuffle that deck in Albany. Sounds like a "Game of Thrones," doesn't it? By the way, TSMC has been so consumed servicing Apple for five nanometer and eventually four nanometer that it's dropped the ball on some of its other's customers, namely Nvidia. And remember, a long-term competitiveness and cost reductions, they all come down to volume. And we think that Intel can't get to volume without an Arm strategy. Okay, so maybe the JV, the Joint Venture that we talked about, maybe we're out on a limb there and that's a stretch. And perhaps Samsung's not willing to play ball, given it's made huge investments in fabs and infrastructure and other resources, locally, but we think it's still viable scenario because we think Samsung definitely would covet a presence in the United States. No good to do that directly but maybe a partnership makes more sense in terms of gaining ground on TSMC. But anyway, let's say Intel can become a trusted foundry with the help of IBM and the U.S. government. Maybe then it could compete on volume. Well, how would that work? Well, let's say Nvidia, let's say they're not too happy with TSMC. Maybe with entertain Intel as a second source. Would that do it? In and of itself, no. But what about AWS and Google and Facebook? Maybe this is a way to placate the U.S. government and call off the antitrust dogs. Hey, we'll give Intel Foundry our business to secure America's semiconductor leadership and future and pay U.S. government. Why don't you chill out, back off a little bit. Microsoft even though, you know, it's not getting as much scrutiny from the U.S. government, it's anti trustee is maybe perhaps are behind it, who knows. But I think Microsoft would be happy to play ball as well. Now, would this give Intel a competitive volume posture? Yes, we think it would, for sure. If it can gain the trust of these companies and the volume we think would be there. But as we've said, currently, this is a very, very long shot because of the, the, the new strategy, the distance the difference in the Foundry business all those challenges that we laid out last week, it's going to take years to play out. But the dots are starting to connect in this scenario and the stakes are exceedingly high hence the importance of the U.S. government. Okay, that's it for now. Thanks to the community for your comments and insights. And thanks again to David Floyer whose analysis around Arm and semiconductors. And this work that he's done for the past decade is of tremendous help. Remember I publish each week on wikibon.com and siliconangle.com. And these episodes are all available as podcasts, just search for braking analysis podcast and you can always connect on Twitter. You can hit the chat right here or this live event or email me at david.vellante@siliconangle.com. Look, I always appreciate the comments on LinkedIn and Clubhouse. You can follow me so you're notified when we start a room and riff on these topics as well as others. And don't forget to check out etr.plus where all the survey data. This is Dave Vellante for the Cube Insights powered by ETR. Be well, and we'll see you next time. (cheerful music) (cheerful music)

>> From the Cube's studios in Palo Alto in Boston, bringing you data-driven insights from The Cube and ETR. This is "Breaking Analysis" with Dave Vellante. >> Exactly one week after Pat Gelsinger's announcement of his plans to reinvent Intel. Arm announced version nine of its architecture and laid out its vision for the next decade. We believe this vision is extremely strong as it combines an end-to-end capability from Edge to Cloud, to the data center, to the home and everything in between. Arms aspirations are ambitious and powerful. Leveraging its business model, ecosystem and software compatibility with previous generations. Hello every one and welcome to this week's Wikibon Cube Insights powered by ETR. And this breaking analysis will explain why we think this announcement is so important and what it means for Intel and the broader technology landscape. We'll also share with you some feedback that we received from the Cube Community on last week's episode and a little inside baseball on how Intel, IBM, Samsung, TSMC and the U.S. government might be thinking about the shifting landscape of semiconductor technology. Now, there were two notable announcements this week that were directly related to Intel's announcement of March 23rd. The Armv9 news and TSMC's plans to invest a $100 billion in chip manufacturing and development over the next three years. That is a big number. It appears to tramp Intel's plan $20 billion investment to launch two new fabs in the U.S. starting in 2024. You may remember back in 2019, Samsung pledged to invest a $116 billion to diversify its production beyond memory trip, memory chips. Why are all these companies getting so aggressive? And won't this cause a glut in chips? Well, first, China looms large and aims to dominate its local markets, which in turn is going to confer advantages globally. The second, there's a huge chip shortage right now. And the belief is that it's going to continue through the decade and possibly beyond. We are seeing a new inflection point in the demand as we discussed last week. Stemming from digital, IOT, cloud, autos in new use cases in the home as so well presented by Sarjeet Johal in our community. As to the glut, these manufacturers believe that demand will outstrip supply indefinitely. And I understand that a lack of manufacturing capacity is actually more deadly than an oversupply. Look, if there's a glut, manufacturers can cut production and take the financial hit. Whereas capacity constraints mean you can miss entire cycles of growth and really miss out on the demand and the cost reductions. So, all these manufacturers are going for it. Now let's talk about Arm, its approach and the announcements that it made this week. Now last week, we talked about how Pat Gelsinger his vision of a system on package was an attempt to leapfrog system on chip SOC, while Arm is taking a similar system approach. But in our view, it's even broader than the vision laid out by Pat at Intel. Arm is targeting a wide variety of use cases that are shown here. Arm's fundamental philosophy is that the future will require highly specialized chips and Intel as you recall from Pat's announcement, would agree. But Arm historically takes an ecosystem approach that is different from Intel's model. Arm is all about enabling the production of specialized chips to really fit a specific application. For example, think about the amount of AI going on iPhones. They move if I remember from fingerprint to face recognition. This requires specialized neural processing units, NPUs that are designed by Apple for that particular use case. Arm is facilitating the creation of these specialized chips to be designed and produced by the ecosystem. Intel on the other hand has historically taken a one size fits all approach. Built around the x86. The Intel's design has always been about improving the processor. For example, in terms of speed, density, adding vector processing to accommodate AI, et cetera. And Intel does all the design and the manufacturing in any specialization for the ecosystem is done by Intel. Much of the value, that's added from the ecosystem is frankly been bending metal or adding displays or other features at the margin. But, the advantage is that the x86 architecture is well understood. It's consistent, reliable, and let's face it. Most enterprise software runs on x86. So, but very, very different models historically, which we heard from Gelsinger last week they're going to change with a new trusted foundry strategy. Now let's go through an example that might help explain the power of Arm's model. Let's say, your AWS and you're doing graviton. Designing graviton and graviton2. Or Apple, designing the M1 chip, or Tesla designing its own chip, or any other company in in any one of these use cases that are shown here. Tesla is a really good example. In order to optimize for video processing, Tesla needed to add specialized code firmware in the NPU for it's specific use case within autos. It was happy to take off the shelf CPU or GPU or whatever, and leverage Arm's standards there. And then it added its own value in the NPU. So the advantage of this model is Tesla could go from tape out in less or, or, or or in less than a year versus get the tape out in less than a year versus what would normally take many years. Arm is, think of Arm is like customize a Lego blocks that enable unique value add by the ecosystem with a much faster time to market. So like I say, the Tesla goes from logical tape out if you will, to Samsung and then says, okay run this against your manufacturing process. And it should all work as advertised by Arm. Tesla, interestingly, just as an aside chose the 14 nanometer process to keep its costs down. It didn't need the latest and greatest density. Okay, so you can see big difference in philosophies historically between Arm and Intel. And you can see Intel vectoring toward the Arm model based on what Gelsinger said last week for its foundry business. Essentially it has to. Now, Arm announced a new Arm architecture, Armv9. v9 is backwards compatible with previous generations. Perhaps Arm learned from Intel's failed, Itanium effort for those remember that word. Had no backward compatibility and it really floundered. As well, Arm adds some additional capabilities. And today we're going to focus on the two areas that have highlighted, machine learning piece and security. I'll take note of the call out, 300 billion chips. That's Arm's vision. That's a lot. And we've said, before, Arm's way for volumes are 10X those of x86. Volume, we sound like a broken record. Volume equals cost reduction. We'll come back to that a little bit later. Now let's have a word on AI and machine learning. Arm is betting on AI and ML. Big as are many others. And this chart really shows why, it's a graphic that shows ETR data and spending momentum and pervasiveness in the dataset across all the different sectors that ETR tracks within its taxonomy. Note that ML/AI gets the top spot on the vertical axis, which represents net score. That's a measure of spending momentum or spending velocity. The horizontal axis is market share presence in the dataset. And we give this sector four stars to signify it's consistent lead in the data. So pretty reasonable bet by Arm. But the other area that we're going to talk about is security. And its vision day, Arm talked about confidential compute architecture and these things called realms. Note in the left-hand side, showing data traveling all over the different use cases and around the world and the call-out from the CISO below, it's a large public airline CISO that spoke at an ETR Venn round table. And this individual noted that the shifting end points increase the threat vectors. We all know that. Arm said something that really resonated. Specifically, they said today, there's far too much trust on the OS and the hypervisor that are running these applications. And their broad access to data is a weakness. Arm's concept of realms as shown in the right-hand side, underscores the company strategy to remove the assumption that privileged software. Like the hypervisor needs to be able to see the data. So by creating realms, in a virtualized multi-tenant environment, data can be more protected from memory leaks which of course is a major opportunity for hackers that they exploit. So it's a nice concept in a way for the system to isolate attendance data from other users. Okay, we want, we want to share some feedback that we got last week from the community on our analysis of Intel. A tech exec from city pointed out that, Intel really didn't miss a mobile, as we said, it really missed smartphones. In fact, whell, this is a kind of a minor distinction, it's important to recognize we think. Because Intel facilitated WIFI with Centrino, under the direction of Paul Alini. Who by the way, was not an engineer. I think he was the first non-engineer to be the CEO of Intel. He was a marketing person by background. Ironically, Intel's work in wifi connectivity enabled, actually enabled the smartphone revolution. And maybe that makes the smartphone missed by Intel all that more egregious, I don't know. Now the other piece of feedback we received related to our IBM scenario and our three-way joint venture prediction bringing together Intel, IBM, and Samsung in a triumvirate where Intel brings the foundry and it's process manufacturing. IBM brings its dis-aggregated memory technology and Samsung brings its its volume and its knowledge of of volume down the learning curve. Let's start with IBM. Remember we said that IBM with power 10 has the best technology in terms of this notion of dis-aggregating compute from memory and sharing memory in a pool across different processor types. So a few things in this regard, IBM when it restructured its micro electronics business under Ginni Rometty, catalyzed the partnership with global foundries and you know, this picture in the upper right it shows the global foundries facility outside of Albany, New York in Malta. And the partnership included AMD and Samsung. But we believe that global foundries is backed away from some of its contractual commitments with IBM causing a bit of a rift between the companies and leaving a hole in your original strategy. And evidently AMD hasn't really leaned in to move the needle in any way and so the New York foundry, is it a bit of a state of limbo with respect to its original vision. Now, well, Arvind Krishna was the face of the Intel announcement. It clearly has deep knowledge of IBM semiconductor strategy. Dario Gill, we think is a key player in the mix. He's the senior vice president director of IBM research. And it is in a position to affect some knowledge sharing and maybe even knowledge transfer with Intel possibly as it relates to disaggregated architecture. His questions remain as to how open IBM will be. And how protected it will be with its IP. It's got, as we said, last week, it's got to have an incentive to do so. Now why would IBM do that? Well, it wants to compete more effectively with VMware who has done a great job leveraging x86 and that's the biggest competitor in threat to open shift. So Arvind needs Intel chips to really execute on IBM's cloud strategy. Because almost all of IBM's customers are running apps on x86. So IBM's cloud and hybrid cloud. Strategy really need to leverage that Intel partnership. Now Intel for its part has great FinFET technology. FinFET is a tactic goes beyond CMOs. You all mainframes might remember when IBM burned the boat on ECL, Emitter-coupled Logic. And then moved to CMOs for its mainframes. Well, this is the next gen beyond, and it could give Intel a leg up on AMD's chiplet intellectual properties. Especially as it relates to latency. And there could be some benefits there for IBM. So maybe there's a quid pro quo going on. Now, where it really gets interesting is New York Senator, Chuck Schumer, is keen on building up an alternative to Silicon Valley in New York now it is Silicon Alley. So it's possible that Intel, who by the way has really good process technology. This is an aside, it really allowed TSMC to run the table with the whole seven nanometers versus 10 minute nanometer narrative. TSMC was at seven nanometer. Intel was at 10 nanometer. And really, we've said in the past that Intel's 10 nanometer tech is pretty close to TSMC seven. So Intel's ahead in that regard, even though in terms of, you know, the intervener thickness density, it's it's not, you know. These are sort of games that the semiconductor companies play, but you know it's possible that Intel with the U.S. government and IBM and Samsung could make a play for that New York foundry as part of Intel's trusted foundry strategy and kind of reshuffle that deck in Albany. Sounds like a "Game of Thrones," doesn't it? By the way, TSMC has been so consumed servicing Apple for five nanometer and eventually four nanometer that it's dropped the ball on some of its other's customers, namely Nvidia. And remember, a long-term competitiveness and cost reductions, they all come down to volume. And we think that Intel can't get to volume without an Arm strategy. Okay, so maybe the JV, the Joint Venture that we talked about, maybe we're out on a limb there and that's a stretch. And perhaps Samsung's not willing to play ball, given it's made huge investments in fabs and infrastructure and other resources, locally, but we think it's still viable scenario because we think Samsung definitely would covet a presence in the United States. No good to do that directly but maybe a partnership makes more sense in terms of gaining ground on TSMC. But anyway, let's say Intel can become a trusted foundry with the help of IBM and the U.S. government. Maybe then it could compete on volume. Well, how would that work? Well, let's say Nvidia, let's say they're not too happy with TSMC. Maybe with entertain Intel as a second source. Would that do it? In and of itself, no. But what about AWS and Google and Facebook? Maybe this is a way to placate the U.S. government and call off the antitrust dogs. Hey, we'll give Intel Foundry our business to secure America's semiconductor leadership and future and pay U.S. government. Why don't you chill out, back off a little bit. Microsoft even though, you know, it's not getting as much scrutiny from the U.S. government, it's anti trustee is maybe perhaps are behind it, who knows. But I think Microsoft would be happy to play ball as well. Now, would this give Intel a competitive volume posture? Yes, we think it would, for sure. If it can gain the trust of these companies and the volume we think would be there. But as we've said, currently, this is a very, very long shot because of the, the, the new strategy, the distance the difference in the Foundry business all those challenges that we laid out last week, it's going to take years to play out. But the dots are starting to connect in this scenario and the stakes are exceedingly high hence the importance of the U.S. government. Okay, that's it for now. Thanks to the community for your comments and insights. And thanks again to David Floyer whose analysis around Arm and semiconductors. And this work that he's done for the past decade is of tremendous help. Remember I publish each week on wikibon.com and siliconangle.com. And these episodes are all available as podcasts, just search for braking analysis podcast and you can always connect on Twitter. You can hit the chat right here or this live event or email me at david.vellante@siliconangle.com. Look, I always appreciate the comments on LinkedIn and Clubhouse. You can follow me so you're notified when we start a room and riff on these topics as well as others. And don't forget to check out etr.plus where all the survey data. This is Dave Vellante for the Cube Insights powered by ETR. Be well, and we'll see you next time. (cheerful music) (cheerful music)

>>live from Stanford University. It's the queue covering Stanford women in data science 2020. Brought to you by Silicon Angle Media. >>Yeah, yeah, and welcome to the Cube. I'm your host Sonia Category and we're live at Stanford University, covering the fifth annual Woods Women in Data Science Conference. Joining us today is new Sha Ajami, who's the director of urban water policy for Stanford. You should welcome to the Cube. Thank you for having me. Absolutely. So tell us a little bit about your role. So >>I directed around water policy program at Stanford. We focused on building solutions for resilient cities to try to use data science and also the mathematical models to better understand how water use is changing and how we can build a future cities and infrastructure to address the needs of the people in the US, in California and across the world. >>That's great. And you're gonna give a talk today about how to build water security using big data. So give us a preview of your talk. >>Sure. So the 20th century water infrastructure model was very much of a >>top down model, >>so we built solutions or infrastructure to bring water to people, but people were not part of the loop. They were not the way that they behaved their decision making process. What they used, how they use it wasn't necessarily part of the process and the assume. There's enough water out there to bring water to people, and they can do whatever they want with it. So what we're trying to do is you want to change this paradigm and try to make it more bottom up at to engage people's decision making process and the uncertainty associated with that as part of the infrastructure planning process. Until I'll be talking, I'll talk a little bit about that. >>And where is the most water usage coming from? So, >>interestingly enough, in developed world, especially in the in the western United States, 50% of our water is used outdoors for grass and outdoor spacing, which we don't necessarily are dependent on. Our lives depend on it. I'll talk about the statistics and my talk, but grass is the biggest club you're going in the US while you're not really needing it for food consumption and also uses four times more water >>than than >>corn, which is which is a lot of water. And in California alone, if you just think about some of the spaces that we have grass or green spaces, we have our doors in the in. The in the malls are institutional buildings or different outdoor spaces. We have some of that water. If we can save, it can provide water for about a 1,000,000 or two million people a year. So that's a lot of water that we can be able to we can save and use, or you are actually a repurpose for needs that you really half. >>So does that also boil down to like people of watering their own lawns? Or is the problem for a much bigger grass message? >>Actually, interestingly enough, that's only 10% of that water out the water use. The rest of it is actually the residential water use, which is what you and I, the grass you and I have in our backyard and watering it so that water is even more than that amount that I mentioned. So we use a lot of water outdoors and again. Some of these green spaces are important for community building for making sure everybody has access to green spaces and people. Kids can play soccer or play outdoors, but really our individual lawns and outdoor spaces. If there are not really a native you know landscaping, it's not something that views enough to justify the amount of water you use for that purpose. >>So taking longer showers and all the stuff is very minimal compared to no, not >>at all. Sure, those are also very, very important. That's another 50% of our water. They're using that urban areas. It is important to be mindful the baby wash dishes. Maybe take shower the baby brush rt. They're not wasting water while you're doing that. And a lot of other individual decisions that we make that can impact water use on a daily basis. >>Right, So So tell us a little bit more about right now in California, We just had a dry February was the 1st 150 years, and you know, this is a huge issue for cities, agriculture and for potential wildfires. So tell us about your opinion about that. So, >>um, the 20th century's infrastructure model I mentioned at the beginning One of the flaws in that system is that it assumes that we will have enough snow in the mountains that would melt during the spring and summer time and would provide us water. The problem is, climate change has really, really impacted that assumption, and now you're not getting as much snow, which is comes back to the fact that this February we have not received any snow. We're still in the winter and we have spring weather and we don't really have much snow on the mountain. Which means that's going to impact the amount of water we have for summer and spring time this year. We had a great last year. We got enough water in our reservoirs, which means that you can potentially make it through. But then you have consecutive years that are dry and they don't receive a lot of water precipitation in form of snow or rain. That will become a very problematic issue to meet future water demands in California. >>And do you think this issue is along with not having enough rainfall, but also about how we store water, or do you think there should be a change in that policy? >>Sure, I think that it definitely has something also in the way we store water and be definitely you're in the 21st century. We have different problems and challenges. It's good to think about alternative ways off a storing water, including using groundwater sources. Groundwater as a way off, storing excess water or moving water around faster and making sure we use every drop of water that falls on the ground and also protecting our water supplies from contamination or pollution. >>And you see it's ever going to desalination or to get clean water. So, interestingly >>enough, I think desalination definitely has worth in other parts of the world, and then they have. Then you have smaller population or you have already tapped out of all the other options that are available to you. Desalination is expensive. Solution costs a lot of money to build this infrastructure and also again depends on you know, this centralized approach that we will build something and provide resources to people from from that location. So it's very costly to build this kind of solutions. I think for for California we still have plenty of water that we can save and repurpose, I would say, and also we still can do recycling and reuse. We can capture our stone water and reuse it, so there's so many other, cheaper, more accessible options available before you go ahead and build a desalination plants >>and you're gonna be talking about sustainable water resource management. So tell us a little bit more about that, too. So the thing with >>water mismanagement and occasionally I use also the word like building resilient water. Future is all about diversifying our water supply and being mindful of how they use our water, every drop of water that use its degraded on. It needs to be cleaned up and put back in the environment, so it always starts from the bottom. The more you save, the less impact you have on the environment. The second thing is you want to make sure every trouble wanted have used. We can use it as many times possible and not make it not not. Take it, use it, lose its right away, but actually be able to use it multiple times for different purposes. Another point that's very important, as actually majority of the water they've used on a daily basis is it doesn't need to be extremely clean drinking water quality. For example, if you tell someone that you're flushing down our toilets. Drinkable water would surprise you that we would spend this much time and resources and money and energy to clean that water to flush it down the toilet video using it. So So basically rethinking the way we built this infrastructure model is very important, being able to tailor water to the needs that we have and also being mindful of Have you use that resource? >>So is your research focus mainly on California or the local community? We actually >>are solutions that we built on our California focus. Actually, we try to build solutions that can be easily applied to different places. Having said that, because you're working from the bottom up, wavy approach water from the bottom up, you need to have a local collaboration and local perspective to bring to their to this picture on. A lot of our collaborators have been so far in California, we have had data from them. We were able to sort of demonstrate some of the assumptions we had in California. But we work actually all over the world. We have collaborators in Europe in Asia and they're all trying to do the same thing that we dio on. You're trying to sort of collaborate with them on some of the projects in other parts of the world. >>That's awesome. So going forward, what do you hope to see with sustainable water management? So, to >>be honest with you, I would often we think about technology as a way that would solve all our problems and move us out of the challenges we have. I would say technology is great, but we need to really rethink the way we manager resource is on the institutions that we have on there. We manage our data and information that we have. And I really hope that became revolutionized that part of the water sector and disrupt that part because as we disrupt this institutional part >>on the >>system, provide more system level thinking to the water sector, I'm hoping that that would change the way we manage our water and then actually opens up space for some of these technologies to come into play as >>we go forward. That's awesome. So before we leave here, you're originally from Tehran. Um and and now you're in this data science industry. What would you say to a kid who's abroad, who wants to maybe move here and have a career in data science? >>I would say Study hard, Don't let anything to disk or do you know we're all equal? Our brains are all made the same way. Doesn't matter what's on the surface. So, um so I and encourage all the girls study hard and not get discouraged and fail as many times as you can, because failing is an opportunity to become more resilient and learn how to grow. And, um and I have, and I really hope to see more girls and women in this in these engineering and stem fields, to be more active on, become more prominent. >>Have you seen a large growth within the past few years? Definitely, >>the conversation is definitely there, and there are a lot more women, and I love how Margot and her team are sort of trying to highlight the number of people who are out there. And working on these issues because that demonstrates that the field wasn't necessarily empty was just not not highlighted as much. So for sure, it's very encouraging to see how much growth you have seen over the years for sure >>you shed. Thank you so much. It's really inspiring all the work you do. Thank you for having me. So no, Absolutely nice to meet you. I'm Senator Gary. Thanks for watching the Cube and stay tuned for more. Yeah, yeah, yeah.

>>law from Las Vegas. It's the Q covering a ws re invent 2019. Brought to you by Amazon Web service is and in along with its ecosystem partners. >>Welcome back to Las Vegas. Lisa Martin with John Ferrier, The Cube at AWS Reinvent 19 Lots of buzz. You can probably hear a little bit of it behind us here. There's about 65,000 people projected to be at a W s reinvent this week. Wow, we're very excited to welcome a distinguished guest and a distinguished architect from Splunk. Back to the Q r didn't murder, do you? Welcome back. >>Thank you very much. Thanks for having me back. >>Great to have you here. So let's kind of talk about here. We are re invent lots of news, lots of stuff. Lots of buzz going on. What kind of the latest with Splunk and a del us. >>All right, so the latest Splunk is obviously acquired us significance. The deal closed in trouble, So we're very excited about that. Um on we really feel that it's a it's a manager off complementary technologies, which is what I want some of the things we probably we can discuss later We're also very excited because we got acquired. Then we were able to go to dot com where we, you know, introduce the combined companies together. But then, at a cubicle on recently, we made a couple of very interesting product announcement that we're excited about, which is way discussing lots of reinvent conference. The 1st 1 is we have a brand new kubernetes experience called the community's Navigator, which we feel is a far, far better way Thio understand and make sense of the community environment. As you know, it's taking getting a lot of traction as a technology. So we're very excited about that because it not only gives you the infrastructure of you, but it also gives it the operators view, which I think operas. We really appreciate it. Three other thing that we're also focusing on. Obviously, if Splunk acquired US logs is an important part of this equation way are doubling down on the ability to ingest logs and make metrics out of them. You know, one of the things we've always discussed is how metrics every lightweight and actionable think that you can put on dashboard. You could put a lot son on the ability. Doing just logs and make them into metrics gives you that capability on the log data. We had a very interesting announcement around AWS. Fire lands on so on where you would be able to take love data from Splunk or other sources, and they bring them in as metrics to the system. The 13 has to do with the growing traction off open source standards. So we were actually very excited to make some contributions in the open telemetry project that we can discuss also later. But the idea is we want to promote open standards on open source, especially in instrumentation in the monitoring. Really? So that's kind of what's new >>question that's here at Amazon this week in this points to your success is observe ability, jazz he's laying out. This is distributed cloud Senator Gravity public Cloud Edge Outpost, Native AWS, Outpost five G with Verizon Wavelength All points to a lot of things. Move around, move compute to the edge where the data is so it speaks of large scale people having a hard time of doing it themselves on observe abilities. Harder and harder to roll your own are managed multiple tools. What are you guys doing to solve that problem? And how do you shape that going forward? >>That's a great question. Like the thing that blows my mind every time I come to reinvent is just the sheer variety of new things that comes across on. People are adopting them. All of these, he mentioned a bunch of different service is that I've got a lot of traction, got a lot of users, so that's happening across the user base. And then the question on D A. Y is because it's no longer about just building a database or, you know, things that you can sort some data and make some credit. It's about building the solution. A good solution. Need to support all the system. The service is that the customer the engineers are using right, so just keeping up with the sheer pace of innovation. Keeping that system up today is extremely, extremely hard. And so I feel that in generous making, less and less sense for most companies to try to roll their own observe ability, they would rather choose good tools that can sort of empower them that can able to move faster and invest in the people and process is part of it, which is also very, very key because >>the downside of rolling your own doing it yourself sure, what are some of the consequences that might happen? >>So in general, the people, the reason people want to build a couple of reasons, right? So one is they might undervalue, like the capabilities that good of the ruling might provide you, they might be afraid of the cost, like observe ability was cheap or free. Most people probably wouldn't build it. Some of them still vote because they might be afraid of vendor locking. Vendor lock in is a problem, and you don't want to be locked into vendors. Right? And what I feel in the terms of the risks is like if you consider observe ability as a cost center and not as an enabler, then you probably gonna try to do D i Y. But I think the view to the right view to have is think of it is something that accelerates your innovation and some of the risks of the advice. If you don't build something that's really capable that can that can do all the border or something that a system. Should you're gonna get slowed down, your innovation is gonna get slowed down. Another very thing, common pattern that we see a lot is maintaining, maintaining that it is a lot of resource is and people to build and maintain such a system. It's easy to prototype something and get it going, But are you going to be able to maintain the head count higher and grow the team on a long term basis? Because it's not something you can suddenly decide? Oops. I made a mistake. Time for a change. >>But change is difficult in any aspect of life. Changed management is something that we talk about office. It's way easier said than done. One of the things Andy Jassy talked about this morning and alluded to this and John's exclusive interview with him the other day was that the transformation needs to start at the top. It needs to be an executive level, a senior level and an aggressive tops down push in your experience in the last couple of years, what are some of the things that you're seeing companies in terms of the senior leadership embracing a understanding where D I y is useful where it's not, but also pushing that I want Oh my God, guys pushing it down from the top. So folks understand why this type of change is fundamental to a business to be competitive, >>right? So in general lighting, the focus is all on, like innovating, faster moving faster, keeping customers happy. Fundamentally, that's what we're doing. You know, our CMO Tom Bueller likes to say that you know the business. The Internet moves at the speed of life, a speed of life, Israel time, right? And so outages, Any kind of issues. They really affect your brand. And that's something that we need to avoid, like the plague, right? And that's gonna wear again. Observe. Ability comes in because this is the thing that's gonna allow you to find out renting There are. But more importantly, even when you don't have outages, the confidence that teams get in making changes, whether it be configuration changes or coat, which is a setup because they have a good system backing them up, is very, very critical. Right now. You can go D i y. You can go with a vendor solution, potentially terrifying, especially you can build one, but I think from top down. The important thing is like you have to be very clear about what you want out of it. And what are those things that you want to accelerate or make better in your organization? If your goal is, I want faster innovation, more code pushes, more changes, less deception like I feel that message needs to be done so that engineers understand that from management perspective, there's full support for this on their empowering you again. Where the two comes from is less important. But I think having those goals very clear and having that culture set from the top is very critical. >>A lot of open source discussions were hearing it here, laying out multiple databases you got pie towards you got tensorflow in machine, learning side on more and more kubernetes again, that's all speaks to where the service measures air going in. Micro Service's There's a lot of talk around open instrumentation open telemetry. What's your take on this? What is what's going on there? Can you share your commentary on those two things? >>Yes, so injured, as you know, like from the beginning, where since in Olympics started, we always believed that instrumentation should be open standards based. There should not be propriety instrumentation. They should be vendor lock in. It was a little bit perhaps ahead of the time, and we started off, but you can see that trend really accelerating now. But at this point, because of the sheer variety of service is and so on, it's very, very hard to build proprietary everything that supports all the all the things out there. What we're seeing is more bottoms up, open source, open standards efforts. Right, And that is great because A for the guys who are doing d i y. Because they don't want vendor lock in open standards is great because you're not really locked into a vendor in your environment. What you're doing is using a different back end, whether it be you know, your own or would it be a vendor's? Some of the things that we're doing is we're actually very happy to see this acceleration, and we're actually helping make that more so. Way just contributed pretty significant open telemetry project, which, as you know, is a way to instrument your environment for traces and metrics and logs eventually and so we actually donated the signal if Ickes smart Asian, which is pretty wonderful because it's a survey that's an agent that's running on your instances on your host, discovers as nuisances pop up. So, you know, speaking of community is the perfect fit for that, and it will start monitoring them and sending you did up on by making it by donating it to open telemetry. Were hoping to sort of accelerate out of the goodness and so that you know, all customers all use it. Whether they're significant customers or not should be able to benefit from that. >>Is an open source the source code? Or is it open as >>it's open source? There's two aspects to it is open standards as well as open. Both of them are happening because through the Amish in acquisition, we're now actually a pretty cool part of the open telemetry effort. So we're not really helping find finalize the standards, but also donating actual source code and components. >>Take a minute to explain. Signal FX is evolution now that you're in Splunk, right? What's changed? What's still the same? What's how is it? Evolve, how a signal effects evolved because you guys were really early ahead of it. A lot of people, but a lot of market power, great customer base and tech. What's the impact of Splunk and signal FX? >>Yes. So you know there's this cliche which is one plus one equals three. It kinda almost feels true here because, like I really, every time I think about this acquisition, it just feels how complimentary these two companies were because we have metrics and traces. Blanc has the best loss platform. But one of the things that we lot of times don't understand is he also a bunch of other technology which is highly relevant to the observe ability, space. For example, the acquired A company called Phantom, which is into automation, which is right up our alley because I feel like after all this mess has died down a little bit on communities, automation is gonna be the next frontier. They're fantastic. Automation platform built the security automation tool called Mission Control based on that, and now we're looking at how we can bring that into observe ability. Another example is incident management, Broncos Victor Ups, which is again exactly right up our alley. So we feel that we can really build a portfolio of solutions that work really, really well, that's one aspect. The other aspect, as you mentioned, is just the market power. And the resource is that's behind us, which is wonderful. For example. They're quite our mission, which is a fantastic complimentary technology to us, and we're working very quickly to sort of integrate the two together. Similarly, is getting the introductions. Having the financial benefit of a Splunk behind us is wonderful to have. So I think it'll only accelerate our >>congratulations on a great venture. I know you guys stayed the course and rightfully so great payday. But great outcome with Splunk Win is a win win. Yes, I gotta ask you the entrepreneurial question because a lot of people are saying, Oh my God, Amazon sucking up all the auction out of the room, Large scale. Got red shifts taking over this. That's taking over that someone's eating someone. Okay, I don't believe that. I believe that there's still a lot of opportunity for entrepreneurs because of this Born in the cloud and reborn in the cloud a new next gen architectures are developing with EJ. What's your opinion on this? As a cloud of alls What's the dynamics? And entrepreneurs and people thinking about innovating and either pivoting or reimagine their business? How should they be thinking about how to win in the new model? What are some of the architectural things that could bet on? What's your expert opinion on that? >>That's a good question. So I have some thoughts on it. Everybody might area once, right? So I feel like move to cloud is just happening. It's happened. Everything is going to move to the cloud. So I think the fundamental technologies like the databases, etcetera, that cloud provided they're always gonna have an advantage because they're going to be able to run it in a more performance way. But the thing that they're doing us a great favour are entrepreneurs is they're making a lot of different service is available to us now. They're not always necessarily all working well together to solve a specific use case. So I feel that they're giving us a tool set, among other things, to combined together to provide solutions for the problems that users organizations are facing. Not necessarily the platform but but the solution, the vertical on top of it. I think there's a lot of opportunity there, as well as sort of just new types of technology you can. As an entrepreneur, you can still build technology that the cloud provider might find as valuable, and they might want to buy you there right when I use you. So there's always opportunity there. But I think they're so busy building that the substrate, this enormous amount of opportunities for further up north. That's kind of my opinion. >>That's great opinion. >>Last question for you on the parlay of opportunity and the career that you've had as cloud is evolving the next gen of the cloud to Toto that John's calling it, and data becomes the critical element that can fine business differentiation and competitive advantages. What are some of the next industries you really think our prime to completely transform? If they get it right, >>I think we're still stop. It is a whole lot of talk of machine learning. I think we're just scratching the surface. I think what's happened is at this point it has become accessible enough on viable enough to be applied to different places. So every day we see a new headline where basically similar techniques were applied to this use case or that this case, and it's amazing being health care, transportation, you name it like digital business. It's happening all the way on our side, on our side of the fence. I feel a Splunk or a signal effects. We want to see a lot of that happening on our side of the fence, because again, because of the complexity, wonder thing that we have discussed with John earlier is how we feel machine learning and artificial intelligence gonna help us operate more efficiently because humans are going to be able to not really rock the entire complexity of what's out there. So I feel there's a lot of assistance that it can provide. That's one area which I think is interesting, And I feel also that one of the things we discussed within Signal FX is his move towards automation automated everything because complex systems, they just need to run themselves At some point. Humans cannot really go and make all the decisions like my my mainframe, itjust kind offer it to tell you we're not really in the middle of it, right to some extent. Similarly, I feel there's not a lot of action gonna happen on Automated Cloud and automated opposite really automated everything. So I think that's another sort of big area that I see happening on one thing that I also like to say that I don't want to make predictions because, like the world is so different from 10 years ago to now, it just blows my mind. I don't know whether I would have been able to sort of think what's gonna happen. So I only wonder what the next five years they're gonna >>bring. Love that opponent. You're >>right. Even a few years ago today, mine are just thank you for joining John A B on today. We appreciate your time. >>Thank you very much >>for John Ferrier. I'm Lisa Martin. You're watching the Cube from Reinvent 19 and Vegas will be right back.

>> Narrator: Live from Washington D.C., it's theCUBE. Covering AWS Public Sector Summit. Brought to you by Amazon Web Services. >> Welcome back, everyone, to Washington D.C. and theCUBE's live coverage of AWS Public Sector Summit. I'm your host, Rebecca Knight, alongside John Furrier. We are joined by Jay Carney. He is the senior vice president global corporate affairs Amazon and AWS. Thank you so much for coming on theCUBE. >> Thank you so much for having me. It's great to be here. >> You are just coming from a panel with Senator Mark Warner of Virginia, where the topic was regulation and tech. I want to hear what was talked about and what your thoughts were there. >> Sure, there were a lot of topics, including the HQ2, which as you know, we're locating in northern Virginia. Senator Warner has a very specific interest in that, and we talked about that a lot. One thing that he's involved in, he's the vice chairman of the Senate Intelligence Committee, the leading democrat on the committee, and he takes these issue very seriously. He's very focused on, especially social media, but tech in general and national security concerns, as well as issues around deep fake news and fake news and the like. Now, a lot of that isn't our territory as a business, but we think that where we do fall into scrutiny for regulation, we welcome the scrutiny. We're a big company, obviously, and we're very focused on serving our customers. Part of delivering for our customers means ensuring that we work with elected officials and regulators and pass that scrutiny well. We'll see what the future brings in different spaces. Our concern, or our hope in general, if it's around privacy or other areas of tech regulation, that uniformity is obviously preferable to having, say, 50 state laws, whether it's around facial recognition technology or broader privacy initiatives. Senator Warner's supportive of a federal legislation, as a lot of folks are both sides of the aisle. >> Jay one of the things that you guys live every day at Amazon, and following you guys for the past nine, ten years now for theCUBE, is you're willing to be misunderstood as a company to continue the long game. Jeff Bezos talked about the long game all the time. Doesn't look at stock prices, all those kind of quips, but the innovation engine has been very strong, and with digital transformation now at an all time high, new value is being created in new ways that some people don't understand. You guys are on a constant mission to educate. Here in D.C., what's clear to me is this awakening of this value proposition, and in some cases, it's not very good, the value. Weaponizing is a word we've heard. Big tech is kind of under a lot of conversations, but there's a lot of good things happening. You guys create a lot of value as a company-- >> Sure, and I think the industry at large creates a lot of value. I think we need to ensure, we, the American people, American citizenry, and on our behalf, those elected officials who ultimately make the decisions, that as we scrutinize and explore regulating some of these arenas, that we do it in a way that creates public benefit, that prevents, wherever possible, misuse of technology, but that continues to allow the kind of innovation that's made the United States the center of technological innovation over the last 30 or 40 years. That's not an easy job, but I think that folks in tech need to work with and collaborate with regulators and lawmakers to talk about how to do that because you wouldn't want, I mean, a good example, I think is technological innovation is value neutral, usually. It's a new service or a new product that can do something. It itself is just a product, so it doesn't have a conscience. It's self moral. How you use it is really what determines whether it's something that's good or bad. Many technologies can be used for good or for ill. We have a service at AWS, a facial recognition service. We're certainly not the only company that provides that service to customers. Thus far, since Amazon recognition has been around, we've had reports of thousands of positive uses, finding missing children, breaking up human sex trafficking, human trafficking rings, assisting law enforcement in positive ways. We haven't heard yet any cases of abuses by law enforcement, but we certainly understand that that potential exists, and we encourage regulators and lawmakers to look closely at that. We've put forth publicly guidelines that we think would be useful as they build a legislative, a regulatory framework. >> (mumbles) asking last night even was saying you guys are very open. He wasn't hiding behind any kind of stories. How do we talk to regulators? We want to embrace those conversations. He wasn't saying, "We want to be regulated." He didn't say that, but he wasn't hiding from the fact that these conversations we need to have. >> I think we understand that the potential misuse of some technology is real. We've seen it in other countries, for example, in ways that violate civil liberties. We want to make sure that in this democracy, that we have an infrastructure in place, a regulatory infrastructure, that continues to allow innovation to blossom but protects the civil liberties of people in the United States. We're a global company, but we started off, and we are an American company, and we care deeply about those issues as a company. >> I think that that's really the big question, is how would this regulatory process work? You're talking about having these conversations, particularly around unintended consequences of these new technologies and services. How would it work? Particularly, someone like you who was in government, now in the private sector, at what point are these conversations taking place, and how might it work? At the innovation stage? At the creation, you know what I mean? Just now that we're really getting into it. >> In some cases, there's real progress being made. On privacy for example, all of your viewers no GDPR in Europe was the first multinational comprehensive privacy regulation that's been implemented. In the United States, we don't have a federal law yet. California's taken steps, has passed a bill, and other states are looking at it. We think for U.S. competitiveness, one law is better than 50 laws. We think that we're fully compliant with GDPR, and it actually was not as complicated for us to meet the compliance requirements as it might've been for other tech companies because of the nature of our business in the European Union. There are aspects of GDPR that I think are unnecessarily bureaucratic or clunky, so there's ways to take that as a base and improve it so that the privacy concerns are rightfully addressed, but innovation continues at pace. >> How about antitrust? We had a conversation a couple years ago to reinvent around antitrust. You made a comment to me, we're faster, ship faster, lower cheaper price, lower prices, how are people harmed? There's been a lot of young academics who are challenging the old antitrust definition. Does digital recast itself in antitrust? This is a conversation that think tanks are starting to have now around what does that mean for the modern era, or modernizing government, including laws of regulation? Your thoughts on that. >> I'm not a lawyer. I'm careful to speak authoritatively where I don't know all the details. Consumer harm is the standard. For all the reasons that you described, our mission as a company is to reward the customer with more convenience, more selection, and lower prices. Certainly, we fulfill that mission and don't meet that standard when it comes to any way you might look at that competitively. Even more broadly, there's a misconception about Amazon. Because we're a consumer-facing business primarily, and because we are involved in a lot of different things, some more successfully than others, that we're perceived as bigger than we are. The fact is retail, our original business, our core business, is the biggest marketplace there is. In the United States, we're less than 4% of retail, and we're not even the biggest retailer in the United States. Cloud, AWS, we're here at the Public Sector Summit. >> You've got competition-- >> We have intense, high quality competition, and deep-pocketed competition. As you know, and your viewers know this, the cloud revolution is in its early stages. The opportunity there is enormous, and we're just getting started. There'll be plenty of winners in this space, so again, I don't see any way that you might look at it, that there would be competitive issues. Also, there's a perception that Amazon itself is singular, so that you buy from Amazon, therefore you're not buying from somebody else, but in fact, when we opened Marketplace, I think in 2001, we opened the website to other sellers. What used to be 100% Amazon product and inventory for sale on amazon.com, has now, 2019, risen to over 55% not being Amazon. Third-party sellers, small and medium sized businesses, more than a million of them in the United States, sell in our store and get access to all the customers we have through our store. That side of our business is growing much faster than the Amazon retail business, and I think it demonstrates the value proposition for all of the small and medium sized businesses. >> Yeah, we've got time for one more question, for Rebecca and I, one, you might have one. As Steve Jobs once said, technology, liberal arts, you've got the nice street signs kind of intersecting, I think that plays now more than ever societal impact has become a huge part of the conversation around tech, tech impact. You're a policy expert. You've been studying it. You're living in D.C. The policy game seems to be more important now than ever before around tech and the participation of technology companies in policy, not just hiring a policy firm, or a team to do it, actively engage and be, as an ingredient of the company. Is there enough people (laughs) that can actually do that, one, and what are some of the key policy opportunities are out there for either young individuals, like my daughter, or other young people coming out of college? Because it seems to me the game is shaping into a new direction. >> The space is fascinating because these issues really are front and center right now around questions around technology and how to ensure that as it continues to evolve that it does so in a way that allows for innovation but also protects private, civil liberties, and the like. You can't be in a more exciting space if you're going to be in the private sector engaging in policy. Even if you're in government, if you're on that side, it's a very interesting space to be in. All of it, tech has grown up, the internet has grown up, and there's no question that with that more attention is being paid. That's fine and appropriate. >> More responsibility and accountability. >> More responsibility, sure. >> I just have one more final thing in this. Because of your vantage point of someone who is in a famously tech savvy administration, the Obama Administration, and then we also see lawmakers questioning Mark Zuckerberg, seemingly not understanding how Facebook makes money, do lawmakers get it? >> I think a lot of lawmakers do. I was just with one, Mark Warner, from Virginia, U.S. senator, former telecomm executive and investor. He very much gets it. The caricature is, I think, exaggerated, but look, that's our job. It's our job, it's the press', it's everybody... One thing we do here with the team we have in D.C. is be a resource of information, try to explain, here's what's happening. Here's how our model works. Here's how the technology works. I think that can only help as regulators and lawmakers decide how they want to approach these problems. >> A lot of innovation opportunities. Just the CIA deal alone is set off from a gestation period, now growth around cloud acceleration. >> I think it demonstrates in a way we're very customer focused, and that is especially true when it comes to our national security agencies and defense agencies, but also that security's our first concern at AWS, as well as at broader Amazon. We're glad to have those customers. >> Thanks for coming by. >> Yup, thanks a lot. >> Yes, excellent. Thanks so much, Jay. >> Thank you. >> I'm Rebecca Knight for John Furrier. Please stay tuned for more of theCUBE AWS Public Sector. We will have Theresa Carlson coming up next. (upbeat music)

(clicking noise) >> Hello, I'm John Furrier, SiliconANGLE media, co-host of theCUBE. We are here on the ground in, here in Santa Clara, California, Centrify's headquarters, with Tom Kemp, the CEO of Centrify, and Parham Eftekhari, who's the co-founder and senior fellow of ICIT, which is the Institute of Critical Infrastructure Technologies, here to talk about security conversation. Guys, welcome to theCUBE's On the Ground. >> Thank you. >> Great to be here. >> Great to see you again, Tom. >> Yeah, absolutely. >> And congratulations on all your success. And Parham, GovCloud is hot. We were just in D.C. with Amazon Web Services Public Sector Summit. It's gotten more and more to the point where cyber is in the front conversation, and the political conversation, but on the commercial side as well. There's incidents happening every day. Just this past month, HBO, Game of Thrones has been hijacked and ransomed. I guess that's ransom, or technically, and a hack. That's high-profile, but case after case of high-profile incidents. >> Yeah, yeah. >> Okay, on the commercial side. Public sector side, nobody knows what's happening. Why is security evolving slow right now? Why isn't it going faster? Can you guys talk about the state of the security market? >> Yeah, well, ya know, I think first of all, you have to look at the landscape. I mean, our public and private sector organizations are being pummeled every day by nation states, mercenaries, cyber criminals, script kiddies, cyber jihadists, and they're exploiting vulnerabilities that are inherent in our antiquated legacy systems that are put together by, ya know, with a Frankenstein network as well as devices and systems and apps that are built without security by design. And we're seeing the results, as you said, right? We're seeing an inundation of breaches on a daily basis, and many more that we don't hear about. We're seeing weaponized data that's being weaponized and used against us to make us question the integrity of our democratic process and we're seeing, now, a rise in the focus on what could be the outcome of a cyberkinetic incident, which, ultimately, in the worst case scenario, could have a loss of life. And so I think as we talk about cyber and what it is we're trying to accomplish as a community, we ultimately have a responsibility to elevate the conversation and make sure that it's not an option, but it is a priority. >> Yeah, no, look, I mean, here we are in a situation in which the industry is spending close to 80 billion dollars a year, and it's growing 10 percent, but the number of attacks are increasing much more than 10 percent, and as Parham said, you know, we literally had an election impacted by cyber security. It's on the front page with HBO, et cetera. And I really think that we're now in a situation where we really need to rethink how we do security in, as enterprises and as even individuals. >> And it's seems, talking about HBO, talking about the government, you mentioned, just the chaos that's going on here in America, you almost don't know what you don't know. And with the whole news cycle going on around this, but this gets back to this notion of critical infrastructure. I love that name, and you have in your title 'ICIT,' Institute of Critical Infrastructure, because, ya know, and certainly the government has had critical infrastructure. There's been bridges, and roads, and whatnot, they've had the DNS servers, there's been some critical infrastructure at the airports and whatnot, but for corporations, the critical infrastructure used to be the front door. And then their data center. Now with cloud, no perimeter, we've talked about this on theCUBE before, you start to change the notion of what critical infrastructure is. So, I guess, Parham, what does critical infrastructure mean, from a public and commercial perspective? Tell me, you can talk about it. And what's the priorities for the businesses and governments to figure out what's the order of operations to get to the bottom of making sure everything's secure? >> Yeah, it's interesting, that's a great question, you know, when most people think about critical infrastructure as legacy technology, or legacy's, you know, its roads, its bridges, its dams. But if you look at the Department of Homeland Security, they have 16 sectors that they're tasked with protecting. Includes healthcare, finance, energy, communications, right? So as we see technology start to become more and more ingrained in all these different sectors, and we're not just talking about data, we're talking about ICS data systems. A digital attack against any one of these critical infrastructure sectors is going to have different types of outcomes, whether you're talking about a commercial sector organization, or the government. You know, one of the things that we always talk about is really the importance of elevating the conversation, as I mentioned earlier, and putting security before profits. I think, ultimately, we've gotten to this situation because a lot of companies do a cost-benefit analysis, say, "You know what? I may be in the healthcare sector, "and ultimately it'll be cheaper for me to be breached, "pay my fines, and deal with potentially even the "loss to brand, to my brand, in terms of brand value, "and that'll cheaper than investing what "I need to to protect my patients and their information." And that's the wrong way to look at it. I think now, as we were talking about this week, the cost of all this is going higher, which is going to help, but I think we need to start seeing this fundamental mind-shift in how we are prioritizing security, as I mentioned earlier. It's not an option, it must be a requisite. >> Yeah, I think what we're seeing now, is in the years past, the hackers would get at some bits of information, but now we're seeing with HBO, with Sony, they can strip mine an entire company. >> They put them out of business. >> Exactly. >> The money that they're doing with ransomeware, which is a little bit higher profile, ransomware, I mean, there's a specific business outcome, here, and it's not looking good, they go out of business. >> Oh, absolutely, and so Centrify, we just recently sponsored a survey, and nowadays, if you announce that you got breached, and you have to, now. It's 'cause you have to tell your shareholders, you have to tell your customers. Your stock drops, on average, five percent in a day. And so we're talking about billions of dollars of market capitalization that can disappear with a breach as well. So we're beyond, it's like, "Oh, they stole some data, "we'll send out a letter to our customers, "and we'll give 'em free Experian for a year." Or something like that." Now, it's like, all your IP, all the content, and John, I think you raised a very good point, as well. In the case of the federal government, it's still about the infrastructure being physical items, and of course, with internet a thing since now it's connected to the internet, so it's really scary that a bridge can flip open by some guy in the Ukraine or Russia fiddling with it. But now with enterprises, it's less and less physical, the store, and we're now going through this massive shift to the cloud, and more and more of your IP is controlled and run. It's the complete deperimeterization that makes things every more complicated. >> Well it's interesting you mentioned the industrial aspect of it, with the bridge, because this is actually a real issue with self-driving cars, this was on everyone's mind, we were just covering some content, covering Ford's event yesterday in San Francisco. They got this huge problem. Ya know, hacking of the cars. So, industrial IOT opens up, again, the surface area, but this kind of brings the question down to customers, that you guys have or companies or governments. How do they become resilient? How do they put steps in place? Because, you know, I was just talking to someone who runs a major port in the U.S., and the issues there are maritime, right? So you talk about infrastructure, container ships, obviously worry about terrorists and other things happening. But just the general IT infrastructure is neanderthal, it's like, 30 years old. >> Yeah. >> So you have legacy infrastructure, as you mentioned, but businesses also have legacy, so how do you balance where you are? How do you know the progress bar of your protection? How do you know the things you need to put in place? How do you get to resilience? >> Yeah, but see, I think there also needs to be a rethink of security. Because the traditional ways that people did it, was protecting the perimeter, having antivirus, firewalls, et cetera. But things have really changed and so now what we're seeing is that an entity has become the top attack vector going in. And so if you look at all these hacks and breaches, it's the stealing of usernames and passwords, so people are doing a good job of, the hackers are social engineering the actual users, and so, kind of a focus needs to shift of securing the old perimeter, to focusing on securing the user. Is it really John Furrier trying to access e-mail? Can we leverage biometrics in this? And trying to move to the concept of a zero-trust model, and where you have to, can't trust the network, can't trust the IP address, but you need to factor in a lot of different aspects. >> It's interesting, I was just following this blog chain because we've been covering a lot of the blog chains, immutable and encrypted, the wallets were targets. (laughing) Hey, this Greta the Wall, where they store the money. Now we own that encrypted data. So, again, this is the, hackers are fast, so, again, back to companies because they have to put if they have shareholder issues, or they have some corporate governance issues. But at the end of the day, it's a moving train. How does the government offer support? How do companies put it in place? What do they need to do? >> Yeah, well, there's a couple of things you can look at. First of all, you know, as a think tank, we're active on Capital Hill, working with members of both minority and majority sides, we're actively proposing bipartisan legislation, which provides a meaningful movement forward to secure and address some of the issues you're talking about. Senator Markey recently put out the Cyber Shield Act, which creates a type of score, right? For a device, kind of like the ENERGY STAR in the energy sector. So just this week, ICIT put out a paper in support of an amendment by Senator Lindsey Graham, which actually addresses the inherent vulnerabilities in our election systems, right? So there's a lot of good work being done. And that really goes to the core of what we do, and the reasons that we're partnering together. ICIT is in the business of educating and advising. We put out research, we make it freely available, we don't believe in com`moditizing information, we believe in liberating it. So we get it in the hands of as many people as possible, and then we get this objective research, and use it as a stepping stone to educate and to advise. And it could be through meetings, it could be through events, it could be through conversation with the media. But I think this educational process is really critical to start to change the minds of-- >> You know, if I can add to that, I think what really needs to be done with security, is better information sharing. And it's with other governments and enterprises that are under attack. Sharing that information as opposed to only having it for themselves and their advantage, and then also what's required is better knowledge of what are the best practices that need to be done to better protect both government and enterprises. >> Well, guys, I want to shift gears and talk about the CyberConnect event, which is coming up in November, an industry event. You guys are sponsoring, Centrify, but you guys are also on the ball, there's a brand new content program. It's an independent event, it's targeted to the industry, not a Centrify user group. Parham, I want to put you on the spot before we get to the CyberConnect event. You mentioned the elections. What's the general, and I'm Silicon Valley and so I had to ask the question 'cause you're in the trenches down in D.C. What is the general sentiment in D.C. right now on the hacking? Because, I was explaining it to my son the other day, like, "Yeah, the Russians probably hacked everybody, "so technically the election "fell into that market basket of hats." So maybe they did hack you. So I'm just handwaving that, but it probably makes sense. The question is, how real is the hacking threat in the minds of the folks in D.C. around Russia and potentially China and these areas? >> Yeah, I think the threat is absolutely real, but I think there has to be a difference between media, on both sides, politicizing the conversation. There's a difference between somebody going in and actually, you know, changing your vote from one side to the other. There's also the conversation about the weaponization of data and what we do know that Russia is doing with regards to having armies of trolls out there or with fake profiles, and are creating faux conversations and steering public sentiment of perception in directions that maybe wasn't already there. And so I think part of the hysteria that we see, I think we're fearful and we have a right to be fearful, but I think taking the emotion and the politics out of it, and actually doing forensic assessments from an objective perspective to understanding what truly is going on. We are having our information stolen, there is a risk that a nation state could execute a very high-impact, digital attack that has a loss of life. We do know that foreign states are trying to impact the outcomes of our democratic processes. I think it's important to understand, though, how are they doing it and is what we're reading about truly what's happening kind of on the streets. >> And that's where the industrial thing you were kind of tying together, that's the loss of life potential, using digital as an attack vector into something that could have a physical, and ultimately deadly outcome. Yeah, we covered, also that story that was put out, about the fake news infrastructure. It's not just the content that they're making up, it's actually the infrastructure fake news. Bionets, and whatnot. And I think Mike Rowe wrote a story on this, where they actually detailed, you can smear a journalist for 40K. >> Yeah. >> These are actually out there, that are billed for specifically these counter... Programs. >> As a service. You know, go on a forum on the Deep Web and you can contract these types of things out. And it's absolutely out there. >> And then what do you say to your average American friends, that you're saying, hey, having a cocktail with, you're at a dinner. What's going on with security? What do you say to them? You should be worried, calm down, no we're on it. What's the message that you share with your friends that aren't in the industry? >> Personally, I think the message is that, you know, you need to vigilant, you need to, it may be annoying, but you do have to practice good cyber hygiene, think about your passwords, think about what you're sharing on social media. We'd also talk, and I personally believe that, some of these things will not change unless we as consumers change what is acceptable to us. If we stop buying devices or systems or apps based on the convenience that it brings to our lives, and we say, "I'm not going to spend money on that car, "because I don't know if it's secure enough for me." You will see industry change very quickly. So I think-- >> John: Consumer behavior is critical. >> Absolutely. That's definitely a piece of it. >> Alright, guys, so exciting event coming up, theCUBE will be covering the CyberConnect event in November. The dates, I think, November-- >> Sixth and seventh. >> Sixth and seventh in New York City at the Grand Hyatt. Talk about the curriculum, because this is a unique event, where you guys are bringing your sponsorship to the table, but providing an open industry event. What's the curriculum, what's the agenda, what's the purpose of the event? >> Yeah, Tom. >> Okay, I'll take it, yeah. I mean, historically, like other security vendors, we've had our users' conference, right? And what we've found is that, as you alluded to, that there just needs to be better education of what's going on. And so, instead of just limiting it to us talking to our customers about us, we really need to broaden the conversation. And so that's why we brought in ICIT, to really help us broaden the conversation, raise more awareness and visibility for what needs to be done. So this is a pretty unique conference in that we're having a lot of CSOs from some incredible enterprise, as well as government. General Alexander, the former of the Cyber Security Command is a keynote, but we have the CSO of Aetna, Blue Cross involved, as well. So we want to raise the awareness in terms of, what are the best practices? What are the leading minds thinking about security? And then parallel, also, for our customers, we're going to have a parallel track where, if they want to get more product-focused technology. So this is not a Centrify event. This is an industry event, ya know. Black Hat is great, RSA is great, but it's really more at the, kind of the bits and bytes-- >> They're very narrow, but you are only an identity player. There's a bigger issue. What about these other issues? Will you discuss-- >> Oh, absolutely. >> Yeah, well-- >> Is it an identity or is it more? >> It actually is more, and this is one of the reasons, at a macro level, the work that we've done at Centrify, for a number of years now. You know, we have shared the same philosophy that we have a responsibility, as experts in the cyberspace, to move the industry forward and to really usher in, almost a cyber security renaissance, if you will. And so, this is really the vision behind CyberConnect. So if you look at the curriculum, we're talking about, you know, corporate espionage, and how it's impacting commercial organizations. We're talking about the role of machine-learning based artificial intelligence. We'll be talking about the importance of encrypting your data. About security by design. About what's going on with the bot net epidemic that's out there. So there absolutely will be a very balanced program, and it is, again, driven and grounded in that research that ICIT is putting out in the relationships that we have with some of these key players. >> So you institute a critical infrastructure technology, the think tank that you're the co-founder of. You're bringing that broader agenda to CyberConnect. >> That's correct, absolutely. >> So this is awesome, congratulations, I got to ask, on the thought leadership side, you guys have been working together. Can you just talk about your relationship between Centrify and ICIT? So you're independent, you guys are a vendor. Talk about this relationship and why it's so important to this event. >> Well, absolutely. I mean, look, as a security vendor, you know, a lot of, a big percentage of security vendors sell into the U.S. federal government, and through those conversations that a lot of the CSOs at these governments were pointing at us to these ICIT guys, right? And we got awareness and visibility thought that. And it was like, they were just doing great stuff in terms of talking about, yes, Centrify is a leading identity provider, but people are looking for a complete solution, looking for a balanced way to look at it. And so we felt that it would be a great opportunity to partner with these guys. And so we sponsored an event that they did, Winter Summit. And then they did such a great job and the content was amazing, the people they had, that we said, "You know what? "Let's make this more of a general thing and "let's be in the background helping facilitate this, "but let the people hear about this good information." >> So you figured out the community model? (laughs) No, 'cause this is really what works. You got to enable, you're enabling this conversation, and more than ever in the security system, would love to get your perspective on this, is that there's an ethos developing, has been developed. And it's expanding aggressively. Kind of opens doors on one side, but security's all about data sharing. You mentioned that-- >> Yeah, absolutely. >> From a hacking standpoint, that's more of a statutory filing, but here, the security space is highly communicative. They talk to each other, and it's a trust relationship, so you're essentially bringing an independent event, you're funding it. >> Yeah, absolutely. >> It's not your event, this is an independent event. >> Absolutely. >> Yeah, and so Tom said it very well, as an institute, we rely on the financial capital that comes in from our partners, like Centrify. And so we would be unable to deliver at a large scale the value that we do to the legislative community, to federal agencies, and the commercial sector, and the institute's research is being shared on NATO libraries and embassies around the world. So this is really a global operation that we have. And so when we talk about layered security, right, we're not into a silver bullet solution. A lot of faux experts out there say, "I have the answer." We know that there's a layered approach that needs to be done. Centrify, they have the technology that plays a part in that, but, even more important than that for us is that they share that same philosophy and we do see ourselves as being able to usher in the changes required to move everything forward. And so it's been a great, you know, we have a lot of plans for the next few years. >> Yeah, that's great work, you're bringing in some great content to the table, and that's what people want, and they can see who's enabling it, that's a great business model for everyone. I got to ask one question, though, about your business. I love the critical infrastructure focus and I like your value you guys are bringing. But you guys have this fellow program. Can you just talk about this, 'cause your a part of the fellowship-- >> Yeah, absolutely. >> You're on a level, and I don't want to say credit 'cause you're not really going to get credit. But it's a badge, it's a bar. >> Yeah, yeah, no-- >> Explain the fellow program. >> That's a great question. At the institute, we have a core group of experts who represent different technology niches. They make up our fellow program, and so as I discussed earlier, when we're putting out research, when we're educating the media, when we're advising congress, when we're doing the work of the institute, we're constantly turning back to our fellow program members to provide some of that research and expertise. And sharing, you know, not just providing financial capital, but really bringing that thought leadership to the table. Centrify is a part of our fellows program, and so we've been working with them for a number of years. It's very exclusive and there's a process. You have to be referred in by an existing fellow program member. We have a lot of requests, but it really comes down to, do you understand what we're trying to accomplish? Do you share our same mission, our same values? And can you be part of this elite community that we've built? And so, you know, Centrify is a big part of that. >> And the cloud, obviously, is accelerating everything. You've got the cloud action, certainly, in your space, and we know what's going on in our world. >> Yeah, absolutely. >> The world is moving at a zillion miles an hour. It's like literally moving a train. So, congratulations, CyberConnect event in November. Great event, check it out, theCUBE will be there, we'll have live coverage, we broadcast, be documenting all the action and bringing it to you on theCUBE, obviously, (mumbles) John Furrier, here at Centrify's headquarters in California, in Silicon Valley, thanks for watching. (upbeat electronic music)

>> Welcome to the latest edition of the MIT Sloan Expert Series. I'm your host, Rebecca Knight. Our topic today is racial bias in the sharing economy, how Uber and Lyft are failing black passengers, and what to do about it. Here to talk about that is Chris Knittel. He is a professor of Applied Economics here at MIT Sloan, and he's also the co-author of a study that shows how Uber and Lyft drivers discriminate based on a passenger's skin color. Thanks so much for joining us. >> Oh, it's great to be here. >> Before we begin, I want to remind our viewers that we will be taking your questions live on social media. Please use the hashtag MITSloanExpert to pose your questions on Twitter. Chris, let's get started. >> Chris: Sure. So there is a lot of research that shows how difficult it is to hail a cab, particularly for black people. Uber and Lyft were supposed to represent a more egalitarian travel option, but you didn't find that. >> That's right, so what we found in two experiments that we ran, and one in Seattle, and one in Boston, is that Uber and Lyft drivers were discriminating based on race. >> Rebecca: We've already seen, actually some evidence of racial discrimination in the sharing economy, not just with ride sharing apps. >> Sure, so there's evidence for Airbnb. And what's interesting about Airbnb actually, is that discrimination is two-sided. So not only do white renters of properties not want to rent to black rentees, but white renters do not stay at a home of a black home owner. >> Did your findings and the findings of that other research you just talked about, does it make you discouraged? >> Partly, I was an optimist. We went into this, at least I went into this hoping that we wouldn't find discrimination, but one thing that has helped, or at least shined a more positive light, is that there are ways that we can do better in this sector. >> You've talked about this study, which you undertook with colleagues from the University of Washington and Stanford, shows the power of the experiment. Can you talk a little bit about what you mean by that? >> Sure, what we did was actually run two randomized control trials. Just like you would test whether a blood pressure medication works, so you would have a control group that wouldn't get the medication, and a treatment group that would. We did the same thing where we sent out in Seattle both black and white RAs that hailed Uber and Lyft rides, and we randomized whether or not it was a black RA calling the ride or a white RA that particular time, and they all drove the same exact route at the same exact times of the day. >> So what did you find? Let's talk about first, what you found in Seattle. >> Sure, so in Seattle, we measured how long it took for a ride to be accepted, and also, how long it took, once it was accepted, for the driver to show up and pick up the passenger. And what we found is, if you're a black research assistant, that in hailing an Uber ride, it took 30 percent longer for a ride to be accepted, and also 30 percent longer for the driver to show up and pick you up. >> 30 percent seems substantial. >> Well, for the time it takes to accept the ride, we're talking seconds, but for the time it takes for a passenger to actually be picked up, it's over a minute longer. And I'll mention also for Lyft, we found a 30 percent increase in the amount of time it took to be accepted, but there was no statistically significant impact on how long it took for the driver to actually show up. >> So, the thing about the minute difference, that can be material, particularly if you're trying to catch a cab, an Uber or a Lyft for a job interview or to get to the airport. >> Yeah, this is introspection, but I always seem to be late, so even a minute can be very costly. >> I hear you, I hear you. So why do you think there was the difference between Lyft and Uber? >> What's interesting, and we learned this while we were doing the experiment, a Lyft driver sees the name of the passenger before they accept the ride, whereas an Uber driver only sees the name after they've accepted. So in order for an Uber driver to discriminate, they have to first accept the ride, and then see the name and then cancel, whereas a Lyft driver can just pass it up right away. So it turns out because of that, the Lyft platform is more easily capable of handling discrimination because it pushed it to another driver faster than the Uber platform. >> I want to come back to that, but I want to say also, that difference caused you to change the way you did the experiment in Boston. >> In Boston, a couple differences. One is that we sent out RAs with two cell phones actually. So each RA had an Uber and Lyft account under a stereotypically white sounding name, and then also an Uber and Lyft account under a stereotypically black sounding name. That was one difference, and then also, what we measured in Boston that we didn't measure in Seattle, is cancellations. So an Uber driver accepts the ride, and then cancels on the RA. >> Let's go back to the stereotypically black sounding name verses white sounding name. You're an economist, how did you determine what those names are? >> We relied on another published paper that actually looked at birth records from the 1970s in Boston, and the birth records tell you not only the name, but also the race of the baby. So they found names that actually 100 percent of the time were African American or 100 percent of the time were not African American. So we relied on those names. >> And the names were... >> So you could imagine Jamal for example, compared to Jerry. >> Alright, Ayisha and Alison. >> Chris: Sure. >> So what was your headline finding in Boston? >> In Boston, what we found is, if you were a black male calling an Uber ride, that you were canceled upon more than twice as often as if you were a white male. >> And what about Lyft? >> For Lyft, there is no cancellation effect, and that's not because there's no discrimination, it's just that they don't have to accept and then cancel the ride, they can just pass up the ride completely. It's actually a nice little experiment within the experiment, we shouldn't find an effect of names on cancellations for Lyft and in fact, we don't. >> And also, the driver network is much thicker in Boston than in Seattle. >> So in Boston, although we found this cancellation effect, we didn't find that it has a measurable impact on how long you wait. And this is somewhat speculation, but we speculate that that's because the driver network is so much more dense in Boston that, although you were canceled upon, there's so many only drivers nearby, that it doesn't lead to a longer wait time. >> How do you think what you found compares to hailing traditional cabs? We started our conversation talking about the vast body of research that shows how difficult it is for black people to hail cabs. >> Yeah, we are quick to point out that we are not at all saying that Uber and Lyft are worse than traditional, status quo system, and we want to definitely make that clear. In fact, in Seattle, we had our same research assistants stand at the busiest corners and hail cabs. What we found there is, if you were a black research assistant, the first cab passed you 80 percent of the time. But if you were a white research assistant, it only passed you 20 percent of the time. So just like the previous literature has found, we found discrimination with the status quo system as well. >> You've talked to the companies about you findings, what has the response been? >> That's been actually heartening. Both companies reached out to us very quickly, and we've had continued conversations with them, and we're actually trying to design followup studies to minimize the amount of discrimination that's occurring for both Uber and Lyft. >> But those are off the record and... >> Right, we're not talking specifics, but what I can say is that the companies understand this research and they definitely want to do better. >> In fact, the companies both have issued statements about this, the first one is from Lyft, "we are extremely proud of the positive impact..." Uber has also responded. So let's talk about solutions to this. What do you and your colleagues who undertook this research suggest? >> We've been brainstorming, we don't know for sure if we have the silver bullet, but a few things could change, for example, you could imagine Uber and Lyft getting rid of names completely. We realize that has a trade off in the sense that it's nice to know the name of the driver... >> Rebecca: Sure, you can strike up a conversation... >> It makes it more social, it makes it more personal, more peer to peer if you will. But it would eliminate the type of discrimination that we uncovered. Another potential change is to delay when you give the name to the driver, so that the driver has to commit more to the ride than he or she previously had to. And that may increase the costs of discrimination. >> So that would be changing the software? >> Right, so you could imagine now, like I said, with Lyft that you see the name right away. Maybe you wait until they're 30 seconds away from the passenger before you give them the name. >> What about the dawn of the age of autonomous vehicles? Might that have an impact? We already know that Uber is experimenting with driverless cars in Pittsburgh and Arizona. >> That would obviously solve it, so that would take the human element out of things, and it's important to point out that these are the drivers that are deciding to discriminate. So provided you didn't write the autonomous vehicle software to discriminate, you would know for sure that that car is not going to discriminate. >> What about a driver education campaign? Do you think that would make a difference? I'm reminded of an essay written by Doug Glanville, who is an ESPN commentator and former pro ball player. He writes, on talking about his experience being denied service by an Uber driver, "the driver had concluded I was a threat, "either because I was dangerous myself, "or because I would direct him to a bad neighborhood, "or give him a lower tip, either way, "given the circumstances, it was hard "to attribute his refusal to anything other than my race. "Shortly after we walked away, I saw the driver assisting "another passenger who was white." >> We all hope that information helps, and eliminates discrimination. It's certainly possible that Uber and Lyft could have a full information campaign, where they show the tip rates for different ethnicities, they show the bad ride probabilities for different ethnicities, and my hope is that once the drivers learn that there aren't differences across ethnicities, that the drivers would internalize that, and stop discriminating. >> Policy, Senator Al Franken has weighed in on this, urging Uber and Lyft to address your research. Do you think that there could be policies too? Does government have a role to play? >> Potentially, but what I'll say again is, that Uber and Lyft, I think have all the incentive in the world to fix this, and that they seem to be taking active steps to fixing this. So what could policy makers do? They can, obviously it's already outlawed. They could come down and potentially fine the companies if there's more evidence of discrimination. But I would at least allow the companies some time to internalize this research, and respond to it, and see how effective they can be. >> Many, many think tanks and government advocacy groups have weighed in too. The MIT Sloan Expert Series recently sat down with Eva Millona of the Massachusetts Immigrant and Refugee Coalition. She will talk about this research in the context of immigration, let's roll that clip. >> We're an advocacy organization, and we represent the interest of foreign born, and our mission is to promote and enhance immigrant and refugee integration. Anecdotally, yes, I would say that the research, and given the impressive sample of the research really leads to a sad belief that discrimination is still out there, and there is a lot that needs to be done across sectors to really address these issues. We are really privileged to live in such a fantastic commonwealth with the right leadership and all sectors together, really making our commonwealth a welcoming place. And I do want to highlight the fantastic role of our Attorney General for standing up for our values, but Massachusetts is one state, and it could be an example, but the concern is nation wide. Given a very divisive campaign, and also not just a campaign, but also, what is currently happening at the national level that the current administration is really rejecting this welcoming effort, and the values of our country as a country, who welcomes immigrants. All sectors need to be involved in an effort to really make our society a better one for everyone. And it's going to take political leadership to really set the right tone, send the right message, and really look into the integration, and the welcoming of the newcomers as an investment in our future of our nation. Uber and Lyft have an opportunity here to provide leadership and come up with promotion of policies that integrate the newcomers, or that are welcoming to the newcomers, provide education and training, and train their people. And as troubling as the result of this research are, we like to believe that this is the attitude of the drivers, but not really what the corporate represents, so we see an opportunity for the corporate to really step in and work and promote policies of integration, policies of improvement and betterment for the whole of society and provide an example. Let me say thank you to Professor Knittle for his leadership and MIT for always being a leader, and looking into these issues. But if we can go deeper into A, the size, B, the geography, but also looking into a wider range of all communities that are represented. Looking into the Latino community, looking into the Arab communities in other parts of the nation in a more rigorous, more deep and larger size of research will be very helpful in terms of promoting better policies and integration for everybody who chooses America to be their home. >> That was Eva Millona of the Massechusetts Immigrant and Refugee Advocacy Coalition. Chris, are you confident this problem can in fact be remedied? >> I think we can do better, for sure. And I would say we need more studies like what we just preformed to see how widespread it is. We only studied two cities, we also haven't looked at all at how the driver's race impacts the discrimination. >> Now we're going to turn to you, questions from our viewers. Questions have already been coming in this morning and overnight, lots of great ones. Please use the hashtag MITSloanExpert to pose your question. The first one comes from Justin Wang, who is an MIT Sloan MBA student. He asks, "what policies can sharing economy startups "implement to reduce racial bias?" >> Well, I would say the first thing is to be aware of this. I think Uber and Lyft and Airbnb potentially were caught off guard with the amount of discrimination that was taking place. So the research that we preformed, and the research on Airbnb gives new startups a head start on designing their platforms. >> Just knowing that this is an issue. >> Knowing it's an issue, and potentially designing their platforms to think of ways to limit the amount of discrimination. >> Another question, did you look at gender bias? Do you have any indication that drivers discriminate based on gender? >> We did look at gender bias. The experiments weren't set up to necessarily nail that, but one thing that we found, for example in Boston, is that there is some evidence that women drivers were taken on longer trips. Again, both the male and the female RAs are going from the same point A to the same point B. >> Rebecca: That was a controlled part of the setting. >> That was the controlled part of the experiment. And we found evidence that women passengers were taken on longer trips and in fact, one of our RAs commented that she remembers going through the same intersection three times before she finally said something to the driver. >> And you think... So you didn't necessarily study this as part of it, but do you have any speculation, conjecture about why this was happening? >> Well, there's two potential motives. One is a financial motive that, by taking the passenger on a longer drive. They potentially get a higher fare. But I've heard anecdotal evidence that a more social motive might also be at play. For example, I have a colleague here at Sloan, who's told me that she's been asked out on dates three times while taking Uber and Lyft rides. >> So drivers taking the opportunity to flirt a little bit. >> Chris: Sure. >> Another question, can you comment on the hashtag DeleteUber campaign? This of course, is about the backlash against Uber responding that it was intending to profit from President Trump's executive order, the banning immigrants and refugees from certain countries from entering the United States. Uber maintains that its intentions were misunderstood, but it didn't stop the hashtag DeleteUber campaign. >> Yeah, I haven't followed that super closely, but to me it seems like Uber's getting a bit of a bad rap. One potential reason why they allowed Uber drivers to continue working is that, maybe they wanted to bring protesters to the airports to protest. So from that perspective, actually having Uber and Lyft still in business would be beneficial. >> Another question, did your study take into account the race of the drivers themselves? >> We actually we not allowed to. So any time you do a randomized control trial in the field like this, you have to go through a campus committee that approves or disapproves the research, and they were worried that if we collected information on the driver, that potentially, Uber and Lyft could go back into their records and find the drivers that discriminate, and then have penalties assigned to those drivers. >> So it just wouldn't be allowed to... >> At least in this first phase, yeah. They didn't want us to collect those data. >> Last question, we have time for one more. Why aren't there more experiments in the field of applies economics like this one? That's a good question. >> That's a great question, and in fact, I think many of us are trying to push experiments as much as possible. My other line of research is actually in energy and climate change research, and we've been- >> Rebecca: You like the hot topic. (lauhging) >> We've been designing a bunch of experiments to look at how information impacts consumers' choices in terms of what cars to buy, how it impacts their use of electricity at home. And experiments, randomized control trials actually started in developmental economics, where MIT has actually pioneered their use. And again, it's the best way to actually test, the most rigorous way to test whether intervention actually has an effect because you have both the controlled group and the treatment group. >> So why aren't they done more often? >> Well, it's tough, often you need to find a third party, for example, we didn't need a third party in the sense that we could just send RAs out with Uber and Lyft. But if we wanted to do anything with the drivers, for example, an information campaign, or if we wanted to change the platform at all, we would've needed Uber and Lyft to partner with us, and that can sometimes be difficult to do. And also experiments, let's be honest, are pretty expensive. >> Expensive because, you obviously weren't partnered with Uber and Lyft for this one, but... >> Right, but we had research assistants take 1500 Uber and Lyft rides, so we had to pay for each of those rides, and we also had to give them an hourly rate for their time. >> Well, Chris Knittle, thank you so much. This has been great talking to you, and you've given us a lot to think about. >> It's been fun, thanks for having me. >> And thank you for joining us on this edition of the MIT Sloan Expert Series. We hope to see you again soon.